The importance of fossil fuels has been diminishing over time as innovative, often independent, forward thinking retailers introduce new products and ideas to existing forecourts.
Snax 24 (now Rontec) and EG Group are visible examples of this. The former possibly being the first to introduce a full blown PFS convenience store at scale to the UK and the latter moving to acquire ASDA recently.
There is a direct corelation between profitability and prices achieved. Therefore, each site will always need to be assessed individually to establish whether profitability has been or is likely to be diminished as a result of Government intervention in the market.
During a recent PRA webinar Christie & Co illustrated how a sustainable reduction in fuel volume due to COVID-19, but a small increase in fuel margin added to a modest increase in retail sales and could in fact increase the profitability of a site. (Available online here
Let us not forget, that a ban would still be 10 years out, and the uptake of Ultra Low Emission Vehicles (ULEVs) remains subdued at just under 3% of all new vehicles. Even if uptake rises to 15% by 2030 it will take a very long time to replace all ICE vehicles. This means the legacy of ICE vehicles will underpin fossil fuel sales for quite some time.
So, there is plenty of time for retailers to adapt their business models to suit consumer demand.
A more pressing issue right now, is the ability of investors to raise bank funding on the purchase of any property. The appetite of some banks to lend seems to have reduced considerably. Having said that, there are still plenty of cash buyers and those backed by private equity to purchase for petrol filing stations. Their appetite suggests to us that the announcement is unlikely to have any noticeable impact on demand.
Steve Rodell -
Managing Director – Retail
P: 020 7227 0759